Measuring and Monitoring Poverty and Wellbeing: Introducing a New Class of Indexes for the Synthesis of Multidimensionality

Mauro, Vincenzo; Biggeri, Mario; Maggino, Filomena (2016). 'Measuring and Monitoring Poverty and Wellbeing: Introducing a New Class of Indexes for the Synthesis of Multidimensionality' Paper presented at the annual conference of the HDCA, Tokyo 2016.

abstract Measuring and monitoring poverty and wellbeing is a key topic in the agenda 2030 debate. The international community reached a large consensus on the 17 Sustainable Development Goals (SDGs) that resulted in an increasing need for a consistent monitoring system in all countries. In this paper we introduce a new class of indexes for the synthesis of multidimensional poverty and wellbeing. Although the construction of an index involves several phases, here we focus merely on the central phase of synthesis, taking into account both theoretical and empirical aspects.   From a theoretical perspective, the class of indexes introduced in this paper embraces the capability approach and its philosophical understanding of development processes. The first element is linked to the fact that “the capability approach proposes a change – a serious departure – from concentrating on the means of living to the actual opportunities of living in itself” (Sen, 2009: 17). In particular, the essential idea of the capability approach is that social arrangements should aim to expand people’s capabilities – their freedom to promote or achieve valuable beings and doings. Following Aristotle, the capabilities of a person have been associated with human flourishing, suggesting that they can be realized in many different ways (Nussbaum, 2000). Therefore, “the focus of the CA is not just on what a person actually ends up of doing, but also on what she is capable of doing, whether or not she chooses to make use of that opportunity” (Sen, 2009: 17). Indeed, “Since any choice of weights should be open to questioning and debating in public discussions, it is crucial that the judgments that are implicit in such weighting be made as clear and comprehensible as possible, and thus be open to public scrutiny” (Anand and Sen, p. 6).   From an empirical perspective, we focus the attention on the desirable properties that an index should have. Any procedure aiming to provide a reduction in the dimension of the data leads to a loss of information. Thus, the function summarising the data is generally chosen in order to obtain the larger reduction associated to a reasonable loss. Nonetheless, it must be noted that the function chosen to synthesise the original data often entails some hypotheses implicitly induced by its mathematical structure. These hypotheses, that should ideally reflect the aims of the index, are not always easy to justify and sometimes appear more as inevitable consequences of the methodology chosen than the result of theoretically sound considerations. We think that it should be the (desired) properties that lead to the index, and not vice versa. Following these basic considerations, we decided to first focus on the characteristics that the index should guarantee and then tried to derive a consistent mathematical structure. Among the properties we require, the most important are: full sensitiveness, flexible rate of substitution between achievements, and straightforward interpretation of the results. All these properties are obtained through a transparent process, that can therefore be open to public scrutiny.

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